While many other bans, especially on social media, seem to me to be quite nuanced, banning the re-sale of an old book is insane. Who does it hurt of this book is still sold? There are good reasons not to publish it for children anymore. There are good reasons not to stock it in a book shop. There are good reasons not to lend it to children in a library. But why would you prevent two people from selling it between themselves at a (digital) marketplace?

The re-sale of the book is NOT banned. You're free (at least in some cities) to sell that awful book on a filthy blanket on the sidewalk if you want. You're free to put an ad in the newspaper. Just because a single company doesn't want to be associated with something that is hurtful does not mean you are prevented from trading in whatever book you desire.

It IS banned on eBay. Who does this protect? Who is hurt if A sells a Seuss book with hurtful stereotype pictures to B on eBay?

This is not like Facebook amplifying someone's vile posts and showing them to hundreds or thousands of people. It's just a 1:1 transaction for a physical object that contains racist depictions.

Tell me, should the government force ebay to sell this book? Or should Ebay be free to decide themselves? I don't get why everyone is so worked up.

Ebay should be forced to allow buyers and sellers to trade anything that is not illegal. They should not be forced to promote items they do not want to promote, but they should not have the final say on whether I can sell or buy an item on their platform.

Why should they not have the final say? It’s their platform. By the way, in eBay’s seller terms & condx, I guarantee there’s a clause where sellers give up any recourse if eBay decides for any reason to delist your items.